Summary Who Will Win the Go-To-Market AI Race? with Stage 2 Capital Co-founder Mark Roberge (Youtube) youtu.be
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Mark Roberge I'm very blessed to be able to talk to a lot of entrepreneurs and thought leaders and serial entrepreneurs and Vcs that are respect a year, We're talking a lot about Ai. And I haven't seen the energy in great entrepreneurs. Thought leaders, vision that I see in their eyes today in like 20 years. And I share the same sentiment And I'm trying to understand why. And respect the fact that, like, when the Internet technology kinda came out, we knew what it was whatever 19 97.
Mark Roberge This kind of the same time as what's going on in Ai right now. That, like, some people at this conference weren't even born yet. That's how long ago it was. And I'm trying to explain, like, why do I have this feeling and why do our peers have this feeling? And I think it's like...
Mark Roberge For the first time in 20 years is a blank canvas. It's complete artistic freedom, especially in our area of b b software, we can reimagine everything. And that didn't happen with the like blockchain, like, I don't know what kind of impact that's gonna have on society with crypto comes back or whatever. But like, I I never saw the blockchain in our sector B saw hours Like I, look at plays? I'm like, can't you just use a Qr code or like, encryption?
Mark Roberge And like yeah, You kinda can. For And then like, social was... Social was huge for our society. For b to b, I don't know. I kinda rewrote some of the marketing playbook and maybe the way we collaborate, Mobile was huge for society, but like, I don't know.
Mark Roberge Like, I use the mobile version of Slack and Zoom and the Crm, but like, kinda is based on the web version. But the Internet, when the Internet came out and we knew what the technology could do, we could reimagine everything. And that's how these vision feel with Ai. And I think that's really actionable for us. Because as you start thinking about it, you become paranoid, that everything you're working on is irrelevant.
Mark Roberge I don't know if you feel like that. I feel like that sometimes. And I've been pushing our entrepreneurs to think that way too. Because I think there's a decent chance that whatever you're working on is a startup as a use case is a problem. It might be irrelevant.
Mark Roberge It might be like it's 19 97 and you're working it on a client server on premise piece software. And you're about to get the rug pulled out from under your feet. And so that's just the 1 thing I'd really push you on is That's our job as founders is to be vision. This is an exciting time to be a visionary. But try to think what a post Ai technology world looks like in 8 years and reimagine what your startup is doing.
Mark Roberge Reimagine how the use case or the problem that you're solving is solved in that world. Because otherwise, I think we face irrelevant. Now it gets even more complicated because The other narrative that I'm hearing that I agree with is that we're in a hype cycle. I'm showing the Ga hype curve here. This was first mentioned to me in January from A moon at Klein Perkins, who's been a great investor, early investor in Slack and Fig box, etcetera.
Mark Roberge And the narrative is that, like, there could be a very close parallel to how the interrupt, the internet disrupted society and b b software. And how Ai will, and we're seeing a lot of parallels to that. And if we were to say what year this is in the Internet rollout out. It's probably around 19 98. Okay.
Mark Roberge So if you remember, if you were around back then, 19 98, it was the new economy. To remember the new economy, All the Goldman Sachs bankers and Mckinsey people quit their jobs and became Ceos of these supposedly disrupt businesses that went public with no revenue. And it was like, iterative ideas. It was like putting the news online or putting your company brochure online. No 1 could see snowflake.
Mark Roberge No 1 could see Uber yet. And even if they did, the society wasn't ready. It was iterative stuff, like, the the early adopters, the first movers didn't win either. In the first wave of the Internet, we we use Aol to dial up to it, opened up a net escape browser and search with Alta Vista. Where are those companies?
Mark Roberge That's where we are right now. Potentially. And then obviously, it came crashing down and the joke was that b was back to consulting and BBB was back to banking. And it was like, I remember I had enrolled at Mit and about the trough for business school at the trough of that curve. There were 600 students in my class, 4 of them were starting companies.
Mark Roberge And I was 1 of them. Everybody is like, what are you doing? Starting a company. That's so 19 99. And sure enough, like, within those walls.
Mark Roberge Companies like Hubspot were created and we had this beautiful disruption and innovation that was an amazing time for entrepreneurship. And perhaps that's what we're gonna see with Ai and we're seeing early signals of it in terms of like, crazy valuations. And certainly iterative technologies. Just embedding Ai in the workflows we do today. That's not the answer.
Mark Roberge That's not the disruption. And so in addition to just rethinking your vision, you gotta think really big about it. Because even if you feel like you have your Ar strategy, Is it really just an iteration that's gonna die in the hype cycle? Or is it truly a disruption? On what's gonna sustain for the next few decades and produce unicorns.
Mark Roberge Alright. So how do we come up with that? I kind of think right now, an important piece of work is the innovators dilemma. I'll get I'll get to that. But what we're trying to do is we're trying to think, like, okay, If web 1 dot o is static content and the user generated content produced a bunch of unicorns.
Mark Roberge What is it that's gonna be the hype versus the displacement. And that's where I like to hone in on innovators dilemma. I don't know if you know innovators dilemma. It's a long time work. Long time work.
Mark Roberge We got a fan here in front of it. Clay Christ inn, the lake Clay Christians since we lost last year. Professor Harvard Business school author of this work. And after Re and years of research he proved that the innovators dilemma causes big companies to get disrupted. It's an important key.
Mark Roberge For entrepreneurship. And the whole premise there is that b companies ride that like that iterative disruptive wave of that technology. And they get so big that they have to sell big products for big profits to their current market, but along comes a new disruptive technology. That in the beginning doesn't represent a big market, and they ignore it. Partially because there's too small for them and partially because it will disrupt their business, Okay?
Mark Roberge So how many razor hand if you use Crm? Okay. Let me let me say this. In 19 95, Si and act owned 90 percent of the Crm business. Raise your hand if you use a Crm.
Mark Roberge Keep your hand up if you're using Si or act. Case and boy. Why didn't they go? Innovators dilemma. So, like, there...
Mark Roberge They have a beautiful on premise client server application, and here comes the Internet. And I'm sure there was a strategic conversation of like, should we make this cloud beast? Let's look at it? Well, first off, it would cause years of work for us? To re architect this whole thing, a huge cost.
Mark Roberge And for what game, there's no market. What Cto is gonna put their data in the cloud That was the message of the time. Every Cto wants their data and the server farm in their basement with protection of 3 badges to get in to get access to it. No one's gonna put in the cloud, but Salesforce takes the gamble. Their first logo was software with a red x through it.
Mark Roberge And it didn't get sold to the big companies, it got sold to the small companies first for a little bit of money, but they worked on it year after year after year and then the big companies were ready for it. And Sea and act weren't and it caused cannibal and disruption. So what is the innovator dilemma today as you rethink your startup in an Ai first world, knowing that we're in a hype cycle, how do you not get height? How do you become a true disrupt in find the innovators, Dilemma? I don't know.
Mark Roberge But the gentleman that told me about this 1 is in the audience here, name's Ul. He's the Co-founder of To tango and he's working on 1 of these. And he basically said think about it. Name's let's is use sales tech as an example. Most sales tech unicorns, the foundation of their pricing model is seat based.
Mark Roberge That's how it works. So just imagine if an engineer approaches the board Ceo and says, I'm working on technology that's gonna get rid of all Sdr str. No way. That will destroy our business. Our whole business is seat based.
Mark Roberge And God forbid, we could even transition from a seat based to a consumption model, there's no way we can demand the Ac that we get from them. It'll cannibal our entire business. And yet the potential of Ai and the maximum efficiency it can create will be the displacement technology. Is that an innovator dilemma? If you look at the language from all of the incumbents today, It's c pilot c copilot c is displace their cannibal is that the opportunity for entrepreneurship.
Mark Roberge Is that the difference between hype and displacement and this huge tech disruption that we're going into? What's the innovator dilemma for your business? Your sector. Now I do have to say, like, this is scary stuff. Alright.
Mark Roberge Like, not just the fact that geniuses that work on this stuff are scared of the future of the human race, which that's very scary. But what's probably easier to see is the economic impact that this could have. And I'm not like I'm not advocate. I'm just saying this is what people are talking about, and this is the potential of the technology. Now, the solving this is not first disaster.
Mark Roberge This... You for Congress, United Nations, I don't know. The halls of the soc economic halls of, like yale and Stanford at Harvard, I don't know. But I I do know that, like, I I wanna just mention it, like, I recognize the economic impact this could have. This technology is coming no matter what?
Mark Roberge I appreciate petitions to sign to try to stop it, but I I'm not sure that that's the solution. It just seems like bad actors will be able to get ahead a leg on us and I'd rather this technology be run by the people in this room. I trust them more. And so... The only point I'll make is if this were to happen, And I will say a caveat that, like, as I debate this in the halls of Harvard business school with some of the best economists in the world.
Mark Roberge They have gone off and done research and come back to me and said, hey, the same narrative would was happening at the brink of mass production at the beginning of last century and the same narrative was happening at the brink of Internet and commerce and disruption of jobs that would happen. And it didn't happen. In fact it created more jobs. So that's their prediction. I hope they're right.
Mark Roberge It's hard for me to see it, but that's what they're saying. But God forbid this does create tremendous. Job displacement. If you happen to be 1 of the ben factors, just make sure you find a way to progress rather than reg. Society.
Mark Roberge I don't know what the answer is whether it's a U ubi tax. I don't know. But just like, let's make sure we understand this as we embark on this crazy technology. Okay. So go to the mountain, rethink your business in a post ia world.
Mark Roberge Hard to do. And by the way, we're in a hype cycle. So think bigger than you actually are. Unfortunately, more complex, more bad news. If you are able to come up with a big vision, and figure out a true displacement business model and technology that is gonna be the unicorn in 10 years.
Mark Roberge The market's not ready for it right now. You will have no customers. I'm sure someone came up with Uber 19 97 and it failed in miserably. Probably wasn't even technically feasible. So we're we're not ready for it.
Mark Roberge So this is really hard because it's like, okay, if I working on what I'm doing, I'm gonna get disrupted in 10 years. But if I work on the true disruption in 10 years, there's is not gonna have any customers. Keep And so this is where the old adage of design big, but start small. Is a very good narrative and operating system to follow. And in fact, this is a forget about Ai.
Mark Roberge This is a root cause of what I see is a lot of entrepreneurial failure this year anyway. And it's caused because of the obsession with venture capital. I mean, it's it's surprising to people that more wealth is generated in startups in non Vc back startups and Vc back startups. That's surprise to people, but it doesn't make the headlines. The Vc back startup makes the headlines.
Mark Roberge So whoever everyone wants to raise Vc. And like, I'm a Vc. I'm telling more world is created and not Vc. And just telling you that. But, you know, when you have to go after vc, like our job for our investors is to generate huge returns, like, go after Unicorns.
Mark Roberge So you have to tell a big market story, like a billion dollar market story. The problem is, yeah, tell the story, but most entrepreneurs try to prove the story right out of the gate. They build a huge product for everybody and try to sell to everyone and that leads to failure. You just can't do that. We don't need to see it all working in the first year.
Mark Roberge We need to believe the vision. So yeah, tell the big story. But build the Mvp that could potentially get you to 10000000 dollars. And once you test it, exploit it and scale that 1 product in that single market. Get to 10000000 dollars.
Mark Roberge It takes 2 or 3 years. If you're cruising, and then that gives you time to test the next market or test the next product or both. And then use that in the next 3 years to get the 50000000. And that gives you more time to test the next product to the next product, market and you're a platform and now you're go Ipo. That's the big story and that is really critical.
Mark Roberge In this time, where I'm telling you or I'm po authenticating that the ideas we have today are either gonna get this... Disruptive or they're iterative. We need the big idea that the market's is not ready for today. So we have to find that beach head that's safe. And that happened during the Internet.
Mark Roberge Bezos and jobs. I can give you a story about both of them. Jeff Bezos did not set out to be a book salesperson. But that was the first version of Amazon. Bezos was, I think a Quan hedge fund person.
Mark Roberge And he was like, this Internet thing's crazy. All of commerce is gonna be disrupted. All of brick and mortar is gonna be disrupted. We're gonna order everything. From clothes to food to everything online, and I wanna sell that, but he didn't start there.
Mark Roberge He actually made a list of 50 things to sell. And looked at it through a lens and he chose books first because we weren't ready for the rest. Books had high margin Books had millions of unique products every single year. And most importantly, no 1 at that time trusted putting their credit card in, And no 1 at their time, trusted buying a product without touching it in a store. But who cares?
Mark Roberge It's a book. So that's the beach head and he exploited it. And not only was it a beautiful beach head, but it created a moat for the long term vision because it was years of selling books, that helped him with his operational rigor, all the warehouses, all the delivery mechanisms and Walmart couldn't catch up, And here is his vision. 20 years later. The same thing happened with jobs.
Mark Roberge I don't know if you know, but jobs got fired from Apple in the eighties. And he got re hired as Ceo when they were months away from bankruptcy. And he turned the company around with the reinvent invention of the Mac. And then when the Internet came about he had the big vision. He's like, Apple is gonna be the hub for the consumer on their digital media experience, everything.
Mark Roberge But he didn't start there. He started with a music, which was ironically number 2 on Bezos list of a best product to start with. He started with the ipod, and the itunes store and use that moat to transition to the iphone and the app marketplace. And the rest is history. We're talking about some of the most valuable companies in the world.
Mark Roberge On the advent of a huge technological disruption and we are back there right now, and that's the opportunity ahead of us. Okay? Alright. I have to go to the mountain and re reimagine my business, but we're in a hype cycle. So I to think bigger.
Mark Roberge When I think big, they're not gonna be ready for it So I have to choose a good beach head. And we got a couple examples on how to do that. And Another example on choosing that opening beach head. That's unique to Ai is we need good data to train them all. We didn't need that with mobile.
Mark Roberge We didn't need that with the Internet, but we need good data. And so if you want to stack the deck in your favor, choose use cases as an entrepreneur, where the big company incumbents don't have the data. That'll stack the deck in your favor, If we go back to sales tech as an example, everybody starting Sdr str c copilot, they have all the data. The incumbents have all the data, the messaging, the cold calls, the conversion to opportunities, Everyone starting forecasting Ai models. They have all the data.
Mark Roberge They have all the opportunity conversions in the sales cycles. Sales Ai coaching, they don't have the data. No 1 has videos of sales managers, coaching reps, and then that turning into performance improvements. No 1 has that. It's just an example.
Mark Roberge But if you're gonna go after this... Huge technological disruption, consider whether the incumbents have the data or not. Now at the same time, like, even if you are doing an Sdr coal copilot, there is a chance you can win. Because of talent. There's tremendous research that shows that the top engineering talent prefers startups over big companies Part of because, like, they actually don't care as much about maximizing their salary income, they care more about working on cool technology with little red tape to deploy that technology.
Mark Roberge And that's what happens at startups. It doesn't happen at big companies. Their stock can should be worth a lot too, and that draws them in. So now we're faced with a bake off. You got startups, who have the best Ai tech talent, but they don't have the data.
Mark Roberge They have limited data. You got the incumbents that have, like, average Ai tech talent with all the data, Who wins? I personally thought the most data would win, but Sam Alt and Peter T disagree and I will go at their vote. They I think if I'm quoting them correctly, feel like there's a diminishing returns to the data at some point. In the model development.
Mark Roberge So if you had to choose between having an A plus Ai tech talent team with millions of records of data, and you were going against a mediocre Ai tech talent team with trillions of data of data, that the startup up wins. And that starts to make sense with the diminishing returns of that data. So there's a feather in our cap as we go ahead to head. But regardless, what does happen in these companies is the acquisition of data becomes an important function. Probably within the business development domain because we don't have any data.
Mark Roberge And we see some early signs of techniques here we see some companies who are out there using the publicly available data to build a model, which is pretty comm, but they're actually using your company data, to tailor the model to you. That's cool. I come in I use your data tailor right. I think there's might be some limitations to how much data e single company has to build the model But that's cool. There are other people who are striking up relationships with people who have data but have no shot of bill and tech team.
Mark Roberge Maybe the credit bureaus is an example. Maybe grocery stores is an example. I don't know. Who has tons of data and has no chance. A building a attack team.
Mark Roberge That's cool if we can partner up with them. The problem is that the credit bureaus think their data is more important than the tech talent, and the start of things the tech sounds is more important the data, so you have a little bake off. I mean, maybe if you can actually find 8 different players that have data and start to, like, build exclusive partnerships with them, you kinda chest move them into having to join your movement or being left out of the future. But regardless with We've never really talked about data acquisition as a function. It's the narrative is that that's gonna be an important function for startups.
Mark Roberge As we attack this opportunity. So that would be a framework to think about a beach head We have to think bigger, we have to go to the mountain. We're probably in a hype curve. So we can't get stuck up in something iterative. We have to find a get, but yet, they're not ready for the big idea.
Mark Roberge So we have to come up with a beach at. And a good beach head is where they don't... The big incumbents don't have the data, We can get access to the data and that beach head creates a moat for the long term vision. Something to think about. So we ran an experiment at Stage 2 capital that'll be instructive to the next point in this journey to build in a unicorn in a opposed Ai world.
Mark Roberge And so staged your chicago, if you haven't heard of us, we're the first Vc firm running back by go to market professionals. So we have the Cro and the Cmo and the Cc, we have 500 of them as our investors from Snowflake and Zoom. And Atlas and Github and always come to some of them interested in in the room here and speaking at the conference. So what I did And actually, I wonder if this is true for you all. How many of you 2 years ago in 20 21 had a board mandate to grow at all cost, and now your board mandate is to be very efficient.
Mark Roberge Is anyone going that change? Okay. That was happening to a lot of our Lps as well. How many of you are looking at Ai as a main driver to do that? Yeah.
Mark Roberge There's not really many hands, which is like a little confusing to me. Because it seems like that would be a big opportunity to adopt that. And so that's what I said at the Lp meeting in May It's like, hey, If you're under a lot of pressure from your board to do more with less. And you wanna try to use Ai in your go to market motion, like for your Str, your account executives, to support people, your market whatever. We're seeing a lot of go to market Ai tech.
Mark Roberge So I can just email them to every week, and you can, like, take meetings with the ones that we see. Whatever And people were psyche about that. A hundred Lps said I wanna see that for my company to use it my company. And so I promoted that. I went online and hey, listen, I have a hundred Cro in Cmos from places like Snowflake and it lasted and Zoom in all these places.
Mark Roberge That, wanna see the tech we're seeing. So if you're starting a company and go to market Ai, fill at this landing page and I'll promote it to them. And I had 200 people fill that out in like a week. So we got a pretty good glimpse at like where the innovation was happening specifically in go to market Ai. And it was actually kinda of boring to be honest with you.
Mark Roberge It was all the iterative innovative stuff, like a quarter of them were Sdr c copilot, a quarter of them were forecast things, whatever. And we had like, I don't know. We had 50 meeting requests I think. And I'm exaggerating here is pretty much 0 pilots. That's crazy.
Mark Roberge And when I went back to the Lps and I was like, what's going on? Like, we love the technology technologies. It's just the lawyers in the It people won't let us use it. We don't have a legal policy on Ip for Ai in our data. And the security team doesn't know how to deal with that.
Mark Roberge So we have to wait. Okay. Well, that's pretty instructive but we're starting a company where do we have to sell? Well, first off, I think that's good news for startups. Because that means that...
Mark Roberge Your incumbents that you wanna try to disrupt are gonna wait to get more operationally efficient, and you can get ahead of the game. And get there faster. The other thing that I saw was they're just suffering especially and go to market tech from too many apps And they were like, I just wanna wait to find out what my current vendor comes out with. And I think that helps us the start too because I don't know if the current vendors are gonna come up with the best stuff. I think the start will.
Mark Roberge And if the big companies are gonna wait to adopt the new innovations. It's just an advantage for us. As startups. So I think that's quite instructive to when we build that Mvp is where do we start And I I kind feel like there were like 2 seemingly unrelated things that happened in the last couple years, 1 being that... Chat Eb came out and we got a really good glimpse of what Ai could do.
Mark Roberge And the other 1 is that we moved, we had a you know, the bullish mark tech dissolve, and we're back to an efficient market. So now what you're left with is If I had to choose which industry to roll out a new tech do, I would not choose manufacturing, I would not choose healthcare care, I would not choose finance. I would choose tech. They're innovators, they know how to run experiments. They know how to deploy this stuff, and the biggest meme in the boardroom at the the tech companies is do more with less.
Mark Roberge That's kind of the summary of Ai. So we have this beautiful, like, the opposite of a perfect storm. There's opportunity where our our beautiful beach head market has a strong desire for our technology. It's just the big folks don't want to adopt it. So that's how I would think about it is if I'm gonna build my Mvp, I'm gonna build it with a start up tech community.
Mark Roberge That's like scary for me to say because The startup up tech by itself as an... That that has a high failure rates, so you're gonna have a lot of churn, but it's just where you're gonna have the quickest bang for your buck to build the models. And then quickly move up to the S and smb mid market tech, which is a pretty common best practice. And over the years the big tech tech companies I think will get their legal and It stuff together and also see that the Ai stuff that the large incumbents come up with is sub optimal to what you as entrepreneurs come up with. So that's it.
Mark Roberge I got 1 more for you, but like, we could be on the brink of the most important technology disruption of our lifetime, and that means that a lot of the stuff we're working on is gonna be irrelevant in 6 years. So rethink it and understand that we're in the hype curve, so you gotta think really big and appreciate innovators dilemma as a way to craft that story. Knowing that the market's not gonna be ready, so you have to be very strategic in choosing that first use case like Bezos did, where the market is ready and it creates a moat for you, and selling it to the right market. Okay. I got 1 more for you.
Mark Roberge But and by the way, I'll take questions over there. It's just that, like, Ai is so controversial right now. Like, there's protesters outside of this conference right now. I just feel like a politician taking questions on Ai in front of cameras. So if it's cool with you, just go over there, and I'll do the question.
Mark Roberge Sorry for... Checking it out. But anyway, I had mentioned stage 2 capital. I'm a... I wanna share some content, because I always come up here and speak, and I try to, like, give you really tactical stuff that you can use tomorrow and I love getting the linkedin messages that say, like, I went to disaster, I implemented a thing and an accelerated revenue.
Mark Roberge I love that. And this is more strategic and I wanted to do this today because again, I'm really paranoid. Than what we're working on is irrelevant. So that's why I talked about that today. But I wanna give you some tactical stuff too.
Mark Roberge So first off, Mandy, who's gonna be speaking on Friday 1 of our partners. If you're in annual planning season, you should be an annual planning season, don't wait till January to build your bottoms a plan, because you'll realize that you should have hired 4 reps in q 4 to hit your 20 24 plan. Please start your annual planning process in on October first, so you can hit your 20 24 number. Mandy got a great template that you can download that helps you build a bottoms up plan that you can actually hit in 20 24. Our other...
Mark Roberge Another partner of ours is Liz Christ. She's been running every Saturday and as stage 2 blog. We basically sit as a group and say, what are the biggest questions coming from our entrepreneurs every week and she writes about them. Whether it's standing up a partnership program or some up your first pricing model or put it together an Msa or whatever it is, she writes about those things from the trenches that we're feeling. If you haven't see my work on science to scaling.
Mark Roberge I personally believe the number 1 failure reason for startups is they they choose the wrong time to scale. And they choose to scale at the wrong pace. They basically copy what Snowflake did and that's not right for you, necessarily. And so what the signs of scaling work does is it helps you and your board calculate using your data, when you should scale and calculate using your data, how fast you should scale. So if you're thinking about moving to skim mo mode, you can check that out.
Mark Roberge And last for Mandy again, she's actually speaking on Friday on this. There's a brain date. On building your first go to market playbook if you have to be in that realm. So these... I have 1 more thought for you But these slides are posted on the stage 2 capital Linkedin account right now.
Mark Roberge So if you want to download the slides, it has all the links from... The downloadable material, you can go to Stage shoot Capital, Linkedin, download them, feel free to follow us if you wanna track some of the tactical things that we put out. Okay. The last point I make is as entrepreneurs history is on your side. Of the Fortune 500 companies that were on that list in 19 50 90 percent are no longer on the list.
Mark Roberge Because of entrepreneurship and innovation and disruption, because of the things we talked about, The longevity on the list has been cut in half. The average time in the Fortune 500 list for a company. In the 19 seventies or so was 30 years. Now it's 15. Ai is expected to do and even make even bigger dent in that.
Mark Roberge History is on your side. And I just want you to remember that because entrepreneurship is hard. And it's so hard to think about how can we compete with the billion dollar marketing budget, with the 10000 employees, with the billboards, with the 20 years of engineering development. But you have to remember that those people are driving aircraft carriers that take so much energy just to turn at 5 degrees, and you are flying in at 15 fighter. And there couldn't be a better time to do that than now, with arguably the biggest technology advancement of our lifetime.
Mark Roberge History is on your side, so Go make history. Thank you.